Dave Kranzler: The dollar went nearly parabolic after the election, along with the Dow and the S&P 500. The move was not supported by fundamental factors in any respect. Rather, it was momentum-chasing game fueled by the empty promise of “hope.” While “hope” is a valid emotion for those who believe in life after death, “hope” in the absence of valid fundamental factors can quickly turn into fear – the fear of losing money…

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Bank of America released a survey of Wall Street “professionals” in which the respondents stated that the “long U.S. dollar” trade is by far the most overcrowded trade. The dollar index has already retreated about 3.5% since the first of the year. If the index breaks below 100, the current exodus from the long dollar trade could quickly turn into a stamped toward the exit.

On the flip-side of this is gold, which has rallied nearly 6% since late December, and silver, which has rallied 7.8% since its end of December low. The fundamental factors driving gold vs. the dollar would be the continued surge in U.S. Treasury debt issuance; which has doubled in size over the last eight years, contracting economic activity notwithstanding the plethora of fake economic reports; a rapidly expanding Government spending deficit; and a rapidly expanding trade deficit.

The quick-fix band-aid for Trump will be to implement a policy that attempts to push the dollar lower. He tweeted as much earlier today. The spike-up in gold is being attributed to that tweet.

What Is Really Behind Gold’s Recent Spike?
But not so fast, fake news adherents. 50% of gold’s move occurred on Monday, while the U.S. was closed in observance of MLK’s birthday and well before the Trump tweet. Mining stocks in Canada moved up sharply yesterday. This tells us that there are other factors behind the move in gold besides the expectation that the dollar is going to sell-off.

One of the Fed Governors, Lael Brainard, gave a speech today in which she somewhat back-pedaled from the Fed threat of four rate hikes during 2017. We knew this was coming. Gold will begin to anticipate an “easing” of the Fed’s stance on monetary policy, likely to occur at the next meeting, especially in light of the December’s retail sales / consumer spending disaster.

As the dollar falls below the 100 level on the dollar index, hedge fund algos will shift from buying dollars and selling paper gold to dumping dollars and piling back into paper gold. But that’s just for starters. The Modi cash removal initiative has failed to put the brakes on Indian gold imports and China and Russia continue to inhale vast quantities of physical gold. This will help infuse “substance” into the hedge fund-driven paper gold/silver trade.

***KWN has now released the fascinating audio interview with the top trends forecaster in the world, Gerald Celente, who discusses the big surprises ahead in 2017, gold, China, and much more,CLICK HERE OR ON THE IMAGE BELOW.

***ALSO JUST RELEASED: With The Dollar Tumbling And Gold & Silver Surging, This Is RemarkableCLICK HERE.

***KWN has also recently releasedthe extraordinary audio interview with the man who advises the most prominent sovereign wealth funds, hedge funds, and institutional funds on the planet, Michael Belkin,and you can listen to it byCLICKING HERE OR ON THE IMAGE BELOW.

***KWN also released one of Marc Faber’s greatest audio interviews ever and the overseas line was crystal clear for the recording. Faber covers the great danger facing the financial system in the coming year, what his predictions are in 2017 for global markets, stocks, bonds, gold, silver, mining shares, etc, what investors should be doing with their money right now, what has the wealthy so worried in 2017, how Trump will impact major markets, and much more, and you can listen to it byCLICKING HERE OR ON THE IMAGE BELOW.